America's Creative Decline

Noted thinker says US is losing its lustre for global talent. Lessons for BC?

When Richard Florida published his upbeat Rise of the Creative Class in 2002, he drew acclaim. What's not to like about a man who says diversity, tolerance, and a vibrant cultural life are required ingredients for economic success? And for hip, well-educated professionals, comfortably ensconced in liberal meccas like San Francisco and New York, it bestowed a brand new label, "cultural creatives," that confirmed their privileged position in the new post-'90s economy.

Florida's latest offering, however, is neither as cheery nor as reassuring. While the emphasis on human creativity -- and the concomitant need for tolerance -- remains unchanged, The Flight of the Creative Class: The New Global Competition for Talent offers a grimmer and more nuanced vision of both America and the world.

This Richard Florida is worried. For one, he fears that America's turn to the right -- hostility to foreigners, widening income divide, social conservatism -- endangers the single most important source of U.S. power: its ability to attract global talent. But even when he looks beyond the borders, Florida finds other reasons to worry. Unlike Thomas Friedman, he sees the dark side of the global creative economy, whose tendency to concentrate economic wealth must be recognized and controlled for the greater good. The same thriving cities, brimming with talent and ingenuity can easily turn into creative ghettoes that increasingly exclude greater parts of humanity.

Richard Florida spoke from his home in Washington D.C.

In your book, you describe a world where, for the first time, the mobility of capital is being matched by the mobility of labor, at least a certain kind of high-skilled labor. So what are the implications for the way we redefine economic power?

There are two things. For a long time, economists thought in terms of comparative advantage and raw materials. Then in the more recent period, two theories emerged. One was a theory associated with Robert Solo -- it's a really good theory -- that says economic growth is really dependent on how much technology you have.

The second theory that came up in the more recent years is that if you want to grow an economy you have to invest in human capital or talent. And there's increasing proof, in fact, that this is true. But because most economists tend to view either technology or talent as "stocks" that countries are endowed with. All my theory really says is that these are not "stocks" but "flows."

The main thing affecting the flow [of talent and technology] is not, in fact, your education system. A perfect example of that is California. California has for decades under-invested in its primary and secondary education system, and yet has these spectacular universities and a vibrant labor market. It's a great open place to live, and attracts people from all over the world.

What I say in my work is that there's this third T -- apart from Technology and Talent -- called Tolerance. The reason this third T is an important part of economic growth and economic advantage is because it attracts talented creative people from all races, ethnicities, income ranges, -- whether they're white, black, Hispanic, Latino, Asia, Indian, women, men, single, married, or gay. So places that are the most tolerant, the most diverse, the most, in words of the new book, "proactively inclusive" have an addition economical advantage.

And, in fact, that's what I believe has really been the core of America's economic advantage for over the course of at least a century, more likely two centuries. It's not been a lot of raw materials, a big market, or just been our American Yankee ingenuity or even our stock of technology. We, in fact, imported most of our technology in the early days from England and Germany. It's really been our emphasis on being open -- providing economic opportunity, for sure, but being open to people, culturally and politically.

My message is that this is really the core axis of economic competition. And my fear is -- I'll just be quite candid -- that there's absolutely no awareness of this in Washington D.C. It's so terrifying.

Or even if there is an awareness of the economic consequences of intolerance, it doesn't seem to change the outcome. In Ohio, for example, they successfully passed this sweeping anti-gay proposition in 2004 despite warnings from the business community that it would force many of them to relocate -- and this in a state that has its share of economic woes. How do you explain that?

What we typically see in America -- in the media -- as political polarization or culture war is really fundamental class divide. It's as big as the class divide that haunted during the birth of the Industrial Revolution, when the rise of the great working class was stifled by a booming, wealth-creating industrial capitalism. What Roosevelt said -- like him or not -- was that we could only keep this industrial engine moving by including the regular blue-collar working person who heretofore had toiled in heinous conditions at substandard wages in "satanic mills."

What's happened with the rise of the creative economy is the benefits of that economy have been very concentrated in about 30 percent of the workforce -- those of us who work in the creative economy (scientists, engineers, people who work in arts, culture, entertainment, writers) and those of us in the professions. There's certainly a great wage range within that, but on average, people who work in the creative sector of the economy make double people in the manufacturing, triple people in the service sector.

So there are many, many people who are not part of the creative economy, who are toiling away in the service economy, which employs about 45 percent of the people. And in the manufacturing sector of the economy, where jobs are still being competed away and going abroad, people are just terrified. They're scared and anxious, and don't know how they connect to this larger economy. What socially conservative forces and the religious right have done very effectively is latch on to that fear and anxiety and say: What's really holding you down is this liberal elite of Silicon Valley, San Francisco Bay Area, New York City, Boston.

What I say in the book is that those of us who consider ourselves progressives -- whether we're Democrats or moderate Republicans -- can't blame George Bush and Karl Rove anymore. They're doing their job. What I say in the book, with great humility, is that a lot of the blame lies on the progressive forces of society who believe that somehow this creative economy could enact itself and pull up many people along with it. That somehow the working class and people being left behind in the creative economy will see this thing and say we're going to attach ourselves to it.

In fact, Bill Clinton failed to do what FDR did. He failed to position the creative economy in a way that could be seen as being inclusive and the Democrats, in a way, allowed this line to be drawn -- and now people being left behind are voting against their economic interests.

So when you write that the "jobs go to the people," you really are talking about certain kinds of people, i.e. the global creative class.

There's one thing I've been thinking about more and more and it's important to articulate it in the context of our conversation. Tom Friedman's book, The World is Flat, has received a lot of attention in Washington and other political centers. But I actually think it's a misnomer to say that if some little kid anywhere in the world can plug into this global economy, he'd be fine.

The point that I want to make is that the world is not flat. The world is even more concentrated, uneven, and unequal than it has ever been. The world, in fact, is really "spiky." What Friedman is doing is looking out from the top of the Empire State Building and seeing only Silicon Valley, Bangalore, Shanghai-- all these outposts of the creative age right now. That's what the world looks like if one looked at it in terms of decentralizing and disaggregating forces.

But if one looks at the very powerful concentrating forces, the forces of unevenness and inequality, one sees the world where only 25 to 50 places really matter. And if you're outside those 25 to 50 places, if you're a kid in India, who's not in Bangalore, if you're growing up in Arkansas or Alabama, things are very different. What's happening is that those creative centers are sucking up all the talent from the hinterland.

Friedman never stepped out of Bangalore, or any of these places that are the creative centers. He only went to the creative hot spots.

Only the 25 cities that matter. What happens to Manchester? What happens to rural India? What happens to rural China? In this world if we let the creative economy just go with its own flow, what we will get is even higher and higher peaks, and the valleys will get flatter and flatter, and they'll turn into these huge ghettos, where people are trying to climb as best they can to the top of the hill.

So the level of uneven development in the world, I think, is arguably worse. Everyone believes that technology is flattening and leveling the world. In fact, it's decentralizing and disaggregating, but it's also concentrating economic assets within two dozen or four dozen of these humongous city regions.

So, in fact, we're creating creative ghettos that are linked by capital, creating almost an alternative universe.

Absolutely, the world of globally connected nomads is made up of my 150 million members of the creative class -- that's only in 45 countries that we looked at. Okay, how many people are there in the world? How many billion? So the people participating at the forefront of this are maybe less than 10 percent of the world's population. That's where the real issue is.

Of course, we have to build our creative class but just enabling a talented tenth to participate isn't going to do it. Yes, it's morally unjust and terrible, but the point is that it's also economically inefficient. If we reach down and harness that creative capability, we would be able to produce far greater things than we ever dreamed.

My theory says there is this connection between human development and economic development. We need to have the most diverse and inclusive economy we can because not only will it make people better off, it will make the whole economic system better off.

You argue that the post-9/11 turn to the right -- the lack of tolerance and hostility toward foreigners in the United States -- is a serious threat to the United States' economic dominance of the world. But it's not going to be India or China, according to you, right?

I don't think the economic threats are China and India. I think that's been way overblown by people who run the United States' international and security policy, who see the world in terms of big countries.

The global competition for talent actually pushes competitive advantage down to the regional level. Not to say that Canada is going to overtake the United States, but Toronto, Vancouver, Montreal are major immigrant gateways where people can live their lifestyle and build economic opportunity. Australia has the largest percentage share of immigrants in the world and the largest share of foreign students in its major cities, Sydney and Melbourne, and even in its smaller cities like Perth and Brisbane. I think of what's happening in places like Amsterdam, Stockholm, and certainly what's happening under the leadership of the new prime minister in Spain.

What is likely to happen is that the society that can do the three Ts is going to figure this out. And that place will become just like the United States [in the early 20th century]. Britain had a much stronger science and Germany had much stronger technology, but as the United States, under the leadership of Roosevelt, overcame its class divide and built an industrial society, it created a tremendous level of social cohesion.

I hope the United States could regain this advantage, but I'm nervous that this division is so deeply ingrained in our country now. It's in that sense -- not the economic sense -- that I fear that we may be a declining power. What I fear is that we may not have the social cohesion anymore and we'll end up fighting one another instead of building a stronger more creative economy and society.

But isn't that precisely the reason why so many people, especially in the media, are so complacent? When you look ahead to, say, 2020, the United States will still be number one in economic growth. Our attitude is that as long as we are number one, we'll be fine.

I think that that's the box we're in. Anyone who travels around the world sees very quickly that the United States is no longer the sole number one as it was when my parents were young. Other countries -- Belgium, Switzerland, Sweden, Japan, Korea, certainly Australia and Canada, and now the great emerging countries, like India and China -- have caught up. There's no longer this extraordinary gap between Americans and the rest of the world.

We believe, at the highest level, that our military power will save us, but it won't and it can't. I think that this world, like you said, is a much more multi-centered, multi-polar world where people no longer have this one choice, America, in terms of where to live. And the other thing is that because we're a big and somewhat isolated and insulated country, they tend to say: Well, if some Indian people, Asian people, Europeans don't come here, that's fine; we're a big country. No one understands that creative talent is now spread completely around the world. And what's given us our advantage and our lifestyle is the fact that we've attracted the best of the best of the best from everywhere.

Now from the perspective of a global citizen it may be better for the world to become a much more multi-polar, much more multi-centered place. But I think from the point of view of America, if we fail to attract those kinds of folks in the future, our standard of living will doubtless decline. I think the handwriting is on the wall when 50 percent of America's computer scientists, engineering talent at the graduate level, of people who work in cellular biology hail from foreign countries.

You can talk all you want about a budget deficit and a trade deficit, but the biggest deficit facing America in the future is its "talent deficit."

Yeah, the skilled labor gap. But that sounds counter-intuitive to the many Americans who see high-skill jobs being sent abroad.

We have a horrendous talent gap. We cannot run our economy without importing foreign talent. Because most Americans see bodies, and they say we have a lot of people here, we can just fit the bodies into the jobs.

This talent shortage facing our country means that we have to do two things. One, we have to make sure we remain an open country in the short run, to make sure that talented people from around the world can help us grow. And secondly, we've got to fix our education system, but that's a much longer term problem.

So what does it mean to create a genuinely inclusive creative economy?

What I have to say is that we have to think about this as moving from a creative, or technology- or knowledge-based economy to a creative or technology- or knowledge-based society. The reorienting axis of that is this fundamental idea that each and every human being is creative and has to be valued as such.

We're, at best, harnessing the creative capacities of 30 to 40 percent of our workforce, and I think no more than maybe 20 to 30 percent of those people's creative faculties -- because most of us are bored. The real nexus of competition in the future will be those communities that engage much more of that creative energy.

That's where the book kind of shifts gears. It says that it's not enough to compete for high-end talent, to keep your doors open to the best of the brightest kids from China, India, Europe, or North America. The real economic power, if you will, in our time is going to come to those cities, regions, countries that can dig down very deeply and include many, many, many of their own people and other people from around the world in this creative economy.

To achieve this, we've got to do three or four things, We have to massively increase our investments and creativity, massively invest in science, technology, engineering, culture. But we need to do so in a way that's not only oriented at the best and the brightest, but harnesses the energy of everyone…. And the way we get kids involved in these sports programs, like soccer and tennis camps, we have to do that for their creativity.

The third thing we need to do is we have to remain an open society. We cannot externally and internally be viewed as a closed society -- it will be disastrous to us and disastrous to the world.

The fourth thing we need to do is a challenge that virtually no one in America is talking about. We have to understand that there are two unsung and neglected areas of economic competition, of economic growth. One I mentioned was tolerance and diversity; the second is cities and urban policy. We need an urban policy that not only improves our cities, not only makes them stronger, but makes them denser -- an urban policy that really focuses on building dense, thriving, vibrant cities. Not because it's a good or ethical thing to do, but because we know that urbanization economies and density are fundamental drivers of economic growth.

But you also point out that these creative centers -- these cities -- themselves are becoming unsustainable, right?

You're in San Francisco, right? I'm in Washington D.C. We are connected in two of the epicenters of creative America. Look at the housing affordability problem that I talk about. Look at the income inequality. What is happening is that we're creating these tremendous peaks of economic innovation, creativity, success; and those are excluding more and more people.

I talk in the book about young people. How are we going to reproduce this creative economy? When I was young, my college friends who worked in the restaurant industry can buy a little condo apartment somewhere in the San Francisco Bay Area. When people were coming out of graduate school in the 60s -- moving to Berkeley, moving to the UC, San Diego, moving to MIT -- they could buy a house. Now a young person has to live out in the hinterlands. How can a young person now be a professor at the University of California, MIT, UCSD? They can't afford to buy in.

So what this does is create an economy where the already-rich colonize these places and entrepreneurial instinct and input and creativity has to move to elsewhere. We've created these very concentrated economic centers, which not only create all kinds of uneven development, but also hold within them conditions that threaten their own success.

Right, because they can't even sustain the talent that they attract, then they risk losing that talent?

What I fear is that this creative impetus can migrate globally. It's not likely to migrate back to communities in Cleveland, Pittsburgh, Oklahoma City, or Tulsa. These places are no longer are competing against San Francisco and Boston, and Austin and Seattle. They're competing with Sydney, and Melbourne, Vancouver, Toronto, Dublin, Amsterdam, Stockholm. We keep looking at our great creative advantages as invincible when we have rates of housing affordability and income, inequality we haven't seen since the Great Depression.

People like my grandparents or like you came to the United States -- even 20 years ago -- saying this is the place where I want to be. Now the United States is no longer that place. That's the important thing.

When we were in Finland, every Finnish person we met in their 30s and 40s had been a high school exchange student in the United States. None of them were planning to send their kids to the United States through the high school exchange. That really struck me because they were saying that the United States is not a very friendly place to foreigners. It's no longer the center of the universe -- there are lots of other places.

I guess what my book is saying is that it's not so much the trade and investment and capital flows that are the critical determinant of our time, it's the globalization of people.

You seem to end the book with a call for a Global New Deal. Is that what it's going to take in the end to build this creative society?

We don't need any national New Deals anymore. We have to have a global conversation about the mobility of people, mobility of talent, and what it will take to overcome the situation of which only 25-50 places matter. You can't build a stable world economy without it. All these problems -- from terrorism to income inequality, disenfranchised youth to the rise of religious fundamentalism -- are all fundamentally linked to this terrible situation.

It's not simply just globalization. It's the rise of this incredibly potent new economic force called the creative economic revolution, where people become means of production. That means that the people whose minds are ready to become the means of production or have the intellectual capital to do that do relatively fine, people who don't will get left terribly behind.

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